Bunge Limited · NYSE:BG
Bunge — Shareholder Meeting (May 2016)
48 slides from Bunge's shareholder meeting presentation, May 25, 2016
Slide 1: Annual General Meeting
Annual General Meeting MAY 25, 2016 1 ANNUAL GENERAL MEETING
Slide 2: Forward-looking statements
Forward-looking statements Today’s presentation includes forward-looking statements that reflect Bunge’s current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided add
Slide 3: Agenda
Agenda Financial overview Strategy Sustainability 3 ANNUAL GENERAL MEETING
Slide 4: A year of milestones in a challenging environment
2015 A year of milestones in a challenging environment Fewer serious safety incidents Record EBIT in Agribusiness Adjusted ROIC of 10% for core Agribusiness-Foods, 3 points above WACC Sugarcane milling achieved positive EBIT and free cash flow Mexico wheat milling synergies on track Achieved $100+ m
Slide 5: Bunge Limited 2015 earnings highlights
Bunge Limited 2015 earnings highlights Combined Agribusiness and Food & Ingredients EBIT ($m) (1) • Agribusiness had record year, driven by strong soy Agri/F&I Agri/F&I crushing results and grain origination and exports $1.2B $1.2B out of Brazil • F&I results impacted by challenging market condition
Slide 6: Returns have consistently improved
Returns have consistently improved… Bunge Limited Trailing 4Q Average ROIC Adjusted for certain gains & charges Adjusted for certain gains & charges and excludes Sugar & Bioenergy segment 10.0% 8.4% 8.3% 7.4% 6.6% WACC = 7% 5.8% 2013 2014 2015 6 ANNUAL GENERAL MEETING
Slide 7: …and so has the trend of our EBIT
…and so has the trend of our EBIT EBIT, four quarter trailing (including & excluding Sugar & Bioenergy segment) (1) $1,600 $1,400 $1,200 $1,000 $800 $600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 Bunge Bunge (excl. S&B segm
Slide 8: Off to a better than expected start in 2016 – Q1 YTD
Off to a better than expected start in 2016 – Q1 YTD EBIT ($m) (1) Agribusiness $373 • Managed margins, logistics and risk management $322 well in a challenging market • South America performed well 2015 2016 Food & Ingredients • Results as expected • Seeing positive signs in Brazil EPS (1) $1.58 $1
Slide 9: Optimistic about our 2016 outlook
Optimistic about our 2016 outlook Expect earnings growth and returns well above WACC; however Q2 will be soft AGRIBUSINESS FOOD & INGREDIENTS SUGAR & BIOENERGY • Oilseeds • Expect improvement from 2015 • Expect growth in EBIT & FCF – Strong demand - USDA – Tough economies and FX • Favorable price ou
Slide 10: Agenda
Agenda Financial overview Strategy Sustainability 10 ANNUAL GENERAL MEETING
Slide 11: Delivering today and building for future
Delivering today and building for future… Focused on what we do best • Grains and Oilseeds – extracting more value; disciplined growth Founded: 1818 • Partner of choice for our farmers and downstream customers Net Sales: $43bn Delivering higher returns and a better balance Countries: 40+ • Great exe
Slide 12: Oilseeds and Grains: The sharpest focus in the industry
Oilseeds and Grains: The sharpest focus in the industry Bunge Player 2 Improved Gross Profit Margins Player 1 Player 3 Ingredients Staple foods Processed foods Commodity (B2B) (B2C) & foodservice Oilseeds Grains Sugar Bunge Raw “where to play” material Coffee Customers chains Cocoa Flavors/ Fragranc
Slide 13: Our execution is focused in four areas
Our execution is focused in four areas Stand for Safety Best in Class Winning Footprint Right Balance 13 ANNUAL GENERAL MEETING
Slide 14: Improving safety drives improvement in overall company performance
Improving safety drives improvement in overall company performance Accelerating and strengthening over a decade of safety improvements in Bunge Working to eliminate or control 5 high potential exposures (HPEs) that have accounted for 90% of serious incidents Global worker participation in HPE
Slide 15: Secure competitive edge by assembling the right assets and partnerships
Secure competitive edge by assembling the right assets and partnerships in the right places Complete key origins WINNING Expansion in key demand markets GLOBAL Add downstream where upstream brings competitive FOOTPRINT advantage Optimize asset portfolio: footprint review, capital partnership
Slide 16: Growing mismatch between where crops are produced and consumed
There is a growing mismatch between where crops are produced and consumed Net Exports: Major Origins Net Imports: Major Destinations 140 Brazil 300 100 US 90 130 250 80 120 70 110 200 60 Asia 100 MENA Argentina 150 50 90 40 80 100 30 70 Black Sea 20 60 50 10 50 - - 40 Asia MENA Brazil, Argentina, an
Slide 17: Leading to robust trade growth that fits Bunge's global footprint
Leading to robust trade growth that fits Bunge’s global footprint World Trade of Corn, Wheat, and Soybeans (MMT) 550 500 450 400 350 Trade Expected to 300 Grow ~150 mmt 250 200 17 ANNUAL GENERAL MEETING
Slide 18: Grains: We have a winning global footprint in origination and exports
Grains: We have a winning global footprint in origination and exports = Strong Bunge presence Canada Black Sea US Gulf Western US Northern Brazil Australia Argentina Center South Brazil US Farmer retention and Bunge Grain Volumes weak distribution margins (mmt) 79 75 73 75 70 59 CAGR: ~7% 53 2010 20
Slide 19: Grains: Our focus has been to fill gaps and capture new flows
Grains: Our focus has been to fill gaps and capture new flows CWB, Canada Nikolayev, Ukraine Barcarena, Brazil Australia • Minority stake through • Original project • Opens new flow for • Provides access to high JV formed with SALIC operational in Q1 2012; corn / beans in Northern growth Asia market
Slide 20: Oilseed Processing: leading and globally balanced presence
Oilseed Processing: We have a leading and globally balanced presence Bunge oilseed processing plant (inclusive of JVs) Global Soymeal Consumption (mmt) Region % of Bunge total Type 216 North America 29% Soybean, Canola 202 186 177 South America 37% Soybean Europe 19% Soybean, Rapeseed, Sunseed Asia
Slide 21: Oilseed Processing: enhancing footprint in key growth regions
Oilseed Processing: Our focus has been on enhancing our footprint in key growth regions Oilseed processing facility - Nikolayev, Ukraine Greenfield 2.4kmt/day sunflower seed and 1.7kmt/day soy switch plant Strategically located adjacent to our deep water port terminal Advantaged logistically to serv
Slide 22: Enhance margins through the mix of businesses, products and customers
Enhance margins through the mix of businesses, products and customers Increase Food & Ingredients businesses with tight linkages to upstream Agribusiness RIGHT Food & Ingredients organic margin expansion: BALANCE category growth framework Agribusiness: services and differentiation 22 ANNUAL GE
Slide 23: Global full chain footprint with strong market positions
Bunge has a global full chain footprint with strong market positions in key regions Eastern Europe #1 Oil North America #1 Dry Corn Asia #1 Oil Building #2 Wheat positions in high growth Indian and Latin America Chinese markets #1 Oil #1 Wheat Oil facility Rice mill Corn mill Wheat mill #1 Seed Oil
Slide 24: Shifting portfolio toward more value-added
Shifting portfolio toward more value-added % Bunge EBIT 2014 Value 2015 Value Future Value added added added 25% 15% ~35% • Grain milling & processing Priorities • Oils & fats • Achieved through a combination of organic and M&A 24 ANNUAL GENERAL MEETING
Slide 25: Expanding share of value added – recent M&A activities
Expanding share of value added – recent M&A activities Whole Harvest Foods Moinho Pacifico Walter Rau, Neuss • Supplies a range of expeller • Largest wheat mill in Latin • Leading European supplier pressed and non GM oil America with 730 kmt of of mid-specialty oils & fats products for B2B customers
Slide 26: Right balance: capital allocation priorities
Right balance: capital allocation priorities Balance sheet strength (BBB/Baa2 credit rating) • Investment grade critical • Commodity companies require capital buffer Reinvest in the Return capital business (Capex) M&A to shareholders • Productivity • Filling gaps in Agribusiness • Dividends: ($249m)
Slide 27: Consistent track record of returning capital to shareholders
Consistent track record of returning capital to shareholders $ per share of common stock Share repurchase history ($m) 1.48 Available Used 1.32 1.17 New $500m share 1.06 repurchase program 0.98 announced May 2015 200 400 0.90 0.82 0.74 0.63 0.67 200 0.56 500 0.48 1,275 0.385 0.42 1,075 775 475 2013
Slide 28: Drive returns by achieving top tier performance in operations and process
Drive returns by achieving top tier performance in operations and process Assess & benchmark performance worldwide BEST IN Measure, prioritize and close performance gaps CLASS Track major initiatives globally Improve knowledge & sharing of best practices globally 28 ANNUAL GENERAL MEETING
Slide 29: Agribusiness: Major programs & priorities for operational excellence
Agribusiness: Major programs & priorities to drive operational excellence and higher returns Crush Optimization Global Logistics Margin & Risk Management • Industrial/operational • Domestic transportation • Margin optimization improvements • Port utilization and flows • Soybean and product flow • Fo
Slide 30: Food & Ingredients: Building a lean culture of operational excellence
Food & Ingredients: Building a lean culture of operational excellence across our businesses C O M M ERC IA L O PER AT IONA L Category Asset Leadership Optimization Account Process Management Optimization Value Supply Chain Realization Optimization ~$145 million EBIT run rate improvement by 2017 30 A
Slide 31: Savings from performance improvement initiatives tracking toward plan
Savings from performance improvement initiatives tracking toward plan $US millions SAVINGS TARGET ACHIEVED (YTD) 2014 $20 100% 2015 $100 100% 2016 $125 ~20% 2017 $100 TOTAL $345 ~40% 31 ANNUAL GENERAL MEETING
Slide 32: Agenda
Agenda Financial overview Strategy Sustainability 32 ANNUAL GENERAL MEETING
Slide 33: Bunge named most sustainable company in Brazil
Bunge named most sustainable company in Brazil 33 ANNUAL GENERAL MEETING
Slide 34: Strong commitments across the business
Strong commitments across the business 21st Century Value Chains Zero-deforestation, human rights protection, CEO Water Mandate, product traceability Climate Change Understand and promote adaption and resilience in Bunge operations and supply chains Resource Management Reduce Bunge’s water, waste, e
Slide 35: Implementing zero-deforestation policy
Implementing zero-deforestation policy Eliminate deforestation from our agricultural supply chains worldwide • Carbon and biodiversity protections Respect local and indigenous community rights and apply FPIC for land purchases and use Enhance the traceability and transparency of key supply chains Di
Slide 36: Promoting sustainable expansion via "Go Zones"
Promoting sustainable expansion via “Go Zones” Building a decision tool that helps identify best areas for future origination Partnership with The Nature Conservancy • Web based: strategic support to identify areas for sustainable ag expansion • Combines public information and internal data • Flexib
Slide 37: Enhancing Palm Oil traceability and sustainability
Enhancing Palm Oil traceability and sustainability Traceable supply chain for Biannual public reporting 100% of palm oil and derivatives in 2016 • Forest & Biodiversity Preservation • Reduction of GHG Emissions • Labor Protection, Human Rights & Free, Prior & Informed Consent 67% traceable at YE2015
Slide 38: Improved resource management
Improved resource management Goals and % reduction in key indicators 2008 – 2010 2011 – 2013 2014 – 2016 44 34 11 10 10 12 11 11.3 9.6 5 5 5 3 4 3 3 3 2.8 1 1 Goals Actual Goals Actual Goals 2015 Actual CO2/mt H2O/mt Waste reduction in this period related to total Waste/mt GJ/mt volume, not intensit
Slide 39: Improving footprint of oilseed operations
Improving footprint of oilseed operations % Change in Absolute Volumes 2010-2015 12 8 Production CO2 H2O Wastes -18 Statistics reflect oilseed processing, -29 refining, margarine & packaging Production, CO2 & Wastes (MT); H2O (m3); Production volumes are not directly comparable to SEC reported figur
Slide 40: Expanding governance & strategic insights
Expanding governance & strategic insights S&CR Committee CEO NEW in 2015 Global Global Sustainability Executive Sustainability Team Committee Council Regional & Segment PQSE Environment Sustainability Teams Group 40 ANNUAL GENERAL MEETING
Slide 41: Increasing transparency
Increasing transparency Global reporting Regional reporting • Dedicated Web site with policies, • Brazil GRI report (A+) performance metrics • Argentina report • CDP Water • New report in BNA coming soon • CDP Investor • Global Citizenship Report • Biannual palm traceability updates 41 ANNUAL GENERA
Slide 42: Summary
Summary We are fully committed to a zero incident safety culture Long-term industry macro drivers are favorable for growth We have an industry leading global footprint that we will continue to enhance — our focus is on Grain and Oilseed value chains Value-added will play an increasingly important ro
Slide 43: Annual General Meeting
Annual General Meeting MAY 25, 2016 43 ANNUAL GENERAL MEETING
Slide 44: Backup: Non-GAAP reconciliation
Backup: Non-GAAP reconciliation Below is a reconciliation of total segment EBIT to net income (loss) attributable to Bunge: Quarter Ended Dec 31 Year Ended Dec 31 ($ in millions) 2015 2014 2015 2014 Total segment EBIT $294 $147 $1,248 $956 Interest income 1 16 43 87 Interest expense (71) (122) (258)
Slide 45: Backup: Non-GAAP reconciliation notes
Backup: Non-GAAP reconciliation notes Below is a reconciliation of earnings per common share-diluted (excl. certain gains & charges and discontinued operations) to earnings per common share-diluted: Quarter Ended Dec 31 Year Ended Dec 31 2015 2014 2015 2014 Continuing operations: Net income (loss) p
Slide 46: Backup: Non-GAAP reconciliation notes
Backup: Non-GAAP reconciliation notes Return on Invested Capital: Bunge Limited continuing operations excl. certain gains and charges Trailing 4 Quarters Dec 31 ($ in millions) 2015 2014 2013 Operating income before income tax $1,290 $1,331 $1,339 Effective tax rate (1) 27% 28% 30% Operating income
Slide 47: Backup: Non-GAAP reconciliation notes
Backup: Non-GAAP reconciliation notes Return on Invested Capital: Bunge Limited continuing operations excl. certain gains and charges and Sugar & Bioenergy segment EBIT Trailing 4 Quarters Dec 31 ($ in millions) 2015 2014 2013 Operating income before income tax $1,290 $1,331 $1,339 Sugar & Bioenergy
Slide 48: Backup: Non-GAAP reconciliation notes
Backup: Non-GAAP reconciliation notes Operating income before income tax Below is a reconciliation of Income from continuing operations before income tax to Operating income before income tax: Trailing 4 Quarters Dec 31 ($ in millions) 2015 2014 2013 Income from continuing operations before income t